While the zero-Covid policy and the trade war with the US are primarily affecting China’s growth as an economy, there are other domestic challenges of which investors must be cognizant. Fund managers at Schroders share their insights on China investments in light of the recent political developments and the persistent global headwinds.

The property market in China has been hit hard due to Beijing’s deleveraging campaign, hitting the foreign source of China investments.

However, Robin Parbrook, fund manager at Schroders, says, “China will press ahead and intensify its efforts around self-sufficiency, especially in core technologies.”

Keith Wade, Chief Economist at Schroders, thinks that the economy has chances of revival as the government targets doubling the GDP per head of population by 2035.

The Deputy Head of Asian ex-Japan Equity Investments at Schroders, Louisa Lo, believes that if Covid controls are relaxed then there is room for a cyclical upswing in the Chinese economy. Earnings have declined in sectors like insurance, and commercial property where foreign funds are primarily invested.

Thomas Wilson, the head of Emerging Market Equities at Schroders, thinks that investors are also becoming concerned due to the US limiting China’s access to semiconductors. “Sentiment has moved markedly negative on China’s structural outlook. While a higher risk premium may be justified to take account of risks, the cyclical may present an opportunity,” says Wilson.

View the complete insight here.